Euro is testing a key support zone after a sharp pullback and breakout of the February range could end the three-month advance. Battle lines drawn.
By : Michael Boutros, Sr. Technical Strategist
Euro Technical Forecast: EUR/USD Weekly Trade Levels
- EUR/USD has declined more than 2.8% from the January high, bringing price back to a critical support zone anchored by the yearly open and recent range lows.
- Monthly divergence continues to warn of fading upside momentum, threatening a broader corrective phase if support gives way.
- February range intact- breakout to determine next move.
- Resistance 1.1917/18, 1.2020 (key), 1.2218- Support 1.1746/75, 1.598 (key), 1.1497
EUR/USD is trading just above a technically significant support band after retreating from the January highs. The recent slide has slowed into an area that has previously acted as a structural inflection point within the broader advance. With the monthly opening range now well-defined, price action around this threshold will be critical in determining whether the market stabilizes or extends its decline. A confirmed breakdown would mark a meaningful shift in tone, while holding above support could preserve the longer-term bullish framework. Battle lines drawn on the EUR/USD monthly & weekly technical charts.
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Euro Price Chart – EUR/USD Monthly
Euro Price Chart – EUR/USD Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Technical Outlook: In my last Euro Technical Forecast we noted that EUR/USD had exhausted into confluent uptrend resistance, “at a key technical barrier- risk for major inflection off this zone into the start of the month. From a trading standpoint, losses would need to be limited to 1.1746 IF price is heading higher on this stretch with a close above 1.2020 needed to fuel the next major leg of the advance.” Euro fell more than 2.8% off those highs with price closing just above support this week. Monthly divergence continues to suggest the broader long-bias remains vulnerable here and the focus is on possible inflection off this zone into the close of the month.
Key near-term support remains at 1.1746/75- a region define by the objective yearly open, the 2025 high-week close (HWC) and the 2025 high-close. Note that the February opening-range low is also within this range and a break / close below would be needed to suggest a more significant correction is underway. Medium-term bullish invalidation remains unchanged at the January close low at 1.1598. A break / weekly close below this slope would suggest a more significant high is in place and a larger correction is underway within the 2025 uptrend. Subsequent support rests with the 52-week moving average (currently ~1.1518) and the March 220 and the 2022 high at 1.1497.
Weekly resistance is eyed at the 2025 swing high and the 100% extension of the 2022 advance at 1.1917/18. Key resistance remains with the 38.2% retracement of the broader 2008 decline at 1.2020. Note that the upper parallel converges on this level next month and a breach / weekly close above is ultimately needed to fuel the next major leg of the rally. Subsequent resistance is eyed with the 2021 high-week close at 1.2218 and the 2021 high at 1.2350.
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Bottom line: Euro is poised to snap a three-month advance with price trading just above pivotal support into the close of February. From a trading standpoint, the focus is on a breakout of the monthly opening-range (1.1746-1.1918) for guidance here. Ultimately, a larger pullback may offer more favorable opportunities closer to uptrend support with a topside breach of this range needed to fuel the next leg of the advance.
The economic calendar is light next week with President Trump’s State of the Union address and the US Producer Price Index (PPI) highlighting event risk into the close of the month. We do get a host of Fed speakers in the days ahead and on the heels of last week’s SCOTUS tariff decision, weaker-than-expected Q4 GDP and hotter-than-expected inflation (PCE) data, traders will be closely watching the central bank commentary as it pertains to the interest rate outlook. As of now, market participants are pricing just a 51% chance the next rate-cut will be delivered in June. Keep your eyes on the headlines and watch the weekly closes here for guidance. Stay nimble into the monthly cross and watch the weekly closes for guidance here. Review my latest Euro Short-term Outlook for a closer look at the near-term EUR/USD technical trade levels.
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--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
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